Shaken, Not Stirred: Has Tahoe-Sierra Settled or Muddied the Regulatory Takings Waters?

Danaya C. Wright and Nissa Laughner

Danaya Wright is an Associate Professor of Law at the University of Florida, Levin College of Law. Nissa Laughner is a Ph.D. candidate in the Mass Communication program at the University of Florida.

[32 ELR 11177]

On April 23, 2002, the U.S. Supreme Court issued its long-awaited decision in Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency.¹ Commentators and land use planners were dreading the decision, fearing that the Court would continue its 15-year pattern of increasing property protections at the expense of state and local governments engaged in land use planning. But in a surprising moment, the Court ruled 6-3 in favor of the Tahoe Regional Planning Agency's nearly three-year moratorium on all development within the Lake Tahoe basin. In so holding, the Court reaffirmed the potentially moribund Penn Central Transportation Co. v. City of New York² balancing test for regulatory takings, arguably overruled or at least dramatically limited the per se takings test articulated in Lucas v. South Carolina Coastal Council,³ sidestepped the question of whether a three-year moratorium constituted a temporary taking under,First English Evangelical Lutheran Church of Glendale v. County of Los Angeles,⁴ and potentially revived the apparent distinction between facial and as-applied challenges.⁵

Does Tahoe-Sierra truly mark a reversal of the Court's increasingly solicitous analysis of private property rights? Probably not. We must be cautious not to read into this decision certainty and precedent that is not there, for the factual record of the case was narrowly tailored to raise very limited questions, as reflected in the word of the grant of certiorari, and the answers to those questions can be construed very conservatively. Yet the decision may give cause for some celebration by land use planners and environmentalists, as well as lower courts and legal scholars, as it demonstrates the Court's willingness to step back from its seemingly blind rush to protect property rights at all costs—a stampede that has had the unintended consequence of transforming takings jurisprudence into a muddy quagmire.⁶ Indeed, the decision could prove monumental in its shift away from Draconian per se takings rules and its reaffirmation of Penn Central ad hoc balancing. While some might bemoan this shift for the lack of clarity it produces, others acknowledge that uncertainty is merely a necessary byproduct of the ultimate question to be answered in all takings cases: when has a regulation gone too far? To answer this question, courts must weigh many competing concerns, concerns that are present whether or not categorical tests are used.

Like many commentators, we are pleased with this decision. The outcome was absolutely correct, for if the regulatory authorities cannot impose a temporary moratorium on development to prevent the permanent environmental degradation of Lake Tahoe, then it seems we could never prevent acid rain, the destruction of streams, the pollution of groundwater, or any other severe environmental harm that human activities inevitably seem to cause. We believe, however, that the Court missed its chance to clarify its regulatory takings jurisprudence and that it decided certain issues using incorrect analysis. Unfortunately, after this decision the quagmire still persists. In this Dialogue, therefore, we analyze the decision in light of overarching questions about the scope and context of the Court's takings jurisprudence and with a view toward the direction we believe future takings jurisprudence should take.

Tahoe-Sierra

The case concerned two moratoria on development affecting Lake Tahoe: Ordinance 81-5 (effective from August 24, 1981 to August 26, 1983) and Resolution 83-21 (effective from August 27, 1983 to April 25, 1984). These moratoria grew out of lengthy negotiations and complex interstate agreements aimed at preventing environmental degradation, [32 ELR 11178] impacts that had begun in the late 1950s and were directly proportional to the increased development of residential and commercial lands adjacent to the lake. In particular, the Court noted that "increased nutrient loading of the lake[,] largely because of the increase in impervious coverage of land in the Basin resulting from that development[,]" was causing the lake to "lose its clarity and its trademark blue color, becoming green and opaque for eternity."⁷ To prevent, or at least slow the progress of, such irreversible damage, the legislatures of the two bordering states, California and Nevada, jointly passed the 1968 Tahoe Regional Planning Compact (Compact). This Compact created the Tahoe Regional Planning Agency (TRPA) to coordinate and regulate development within the lake's basin in order to facilitate specific preservation goals. Four years later, in 1972, the TRPA made its first preservation attempt by dividing the basin into seven "land capability districts" and imposing development restrictions in each district.

The 1972 ordinance was, however, riddled with exceptions that made it difficult for the TRPA to limit the construction of new residential housing along the scenic periphery of Lake Tahoe. As a result, environmental damage continued. Frustrated, the state of California withdrew its support from the TRPA and independently imposed stricter regulations on California land within the basin. Recognizing, however, that only joint state effort would be effective in stopping the degradation, California reentered negotiations with Nevada in 1980. Shortly thereafter the two states, with the approval of the U.S. Congress and the president, adopted an amendment to the Compact which directed the TRPA to develop stricter environmental standards on air and water quality, soil conservation, and vegetation preservation, and to adopt a regional plan to achieve and maintain the environmental standards which it was to set. The amendment also recognized that it was necessary to halt temporarily all development which might "otherwise absorb the entire capability of the region for further development or direct it out of harmony with the ultimate plan."⁸ The amendment prohibited development of new residential housing until adoption of the final plan or through May 1, 1983, whichever first occurred.

Although the TRPA diligently worked on development of a comprehensive regional plan, it concluded that it could not meet the deadlines in the Compact, and thus enacted Ordinance 81-5 imposing the first moratorium on development in the area. The TRPA completed its environmental threshold criteria on August 26, 1982, only two months after the Compact's deadline. Pursuant to the amended Compact, then, the TRPA had one year to complete the regional plan, which would be due August 26, 1983. When the regional plan was not yet complete on that date, the TRPA enacted its second moratoria, Resolution 83-21, which suspended all projects until the new regional plan was adopted on April 26, 1984 (roughly eight months later). All told, the two moratoria imposed comprehensive development restrictions for 32 months, from August 24, 1981 through April 26, 1984.

Almost immediately after the new regional plan was adopted, however, the state of California sought and was granted an injunction enjoining its implementation because the land use controls were believed to be insufficiently stringent to protect the basin.⁹ The injunction was upheld by the U.S. Court of Appeals for the Ninth Circuit.¹⁰ The court agreed with California that the TRPA had not taken steps sufficient to protect Lake Tahoe from environmental damage and to meet its legislative purpose. Thus, the TRPA was forced to develop a new, more stringent plan in conformity with the Compact's stated goals. During the drafting of this new plan, the TRPA prohibited construction on "sensitive" lands in the basin. Only when the TRPA published its new plan in 1987 were the development restrictions lifted. Yet, by the time the case had reached the Court, only the two moratoria covering the 32-month period were at issue, not the additional 3 years covered by the injunction or any permanent restrictions resulting from the 1987 plan.¹¹

Indeed, there was significant disagreement in this case between the majority and the dissenting opinions as to whether the development ban should be viewed as 32 months, or whether it should be construed as the nearly 6 years that passed before creation of a new plan in 1987. The petitioners, landowners whose development plans were halted by all of these regulations, viewed the 32-month moratoria as fundamentally different than the 3-year injunction period. Hoping to prove a per se regulatory taking for the earlier time, they sought recovery only for that period.¹² This bifurcation of regulatory periods allowed the Court to examine only the 32-month period in isolation from the earlier and later development restrictions which, in combination, were in operation for a significantly longer period. Thus, by putting all their eggs in the per se basket on the moratoria, the petitioners undermined their overall takings claim, when the regulations in total actually extended nearly a decade.

The Court's majority opinion, written by Justice John Paul Stevens, and joined by Justices Sandra Day O'Connor, Anthony M. Kennedy, David H. Souter, Ruth Bader Ginsburg, and Stephen Breyer, refused to find a per se taking under Lucas, affirming instead the district court's conclusion that the analysis must proceed under Penn Central balancing.¹³ Unfortunately for the petitioners, they had not appealed the district court's finding that there was no taking under Penn Central, thus foreclosing the possibility of recovery on that ground. In affirming the use of Penn Central balancing, the Court soundly rejected the petitioner's claim that a temporal interest in property could be segmented off [32 ELR 11179] of the overall fee interest and thus made to fit within the Lucas per se rule requiring compensation whenever 100% of the value of the property right is destroyed. The Court also held that there was no clear and unequivocal taking during the moratoria which would necessitate compensation under the temporary takings doctrine of First English.

The Court strongly affirmed the parcel-as-a-whole rule and limited the application of temporary takings doctrine. Presumably, this holding will make it much more difficult for landowners to claim that compensation is due whenever 100% of their right to develop for a specific period of time is taken. Instead, landowners must now demonstrate how the challenged regulation affects all the property rights of the landowner in her entire parcel, including the duration of the entire property right, and the courts must weigh whether a restriction on only one part, whether temporal or physical, goes too far in relation to the total interests affected.

In analyzing what the Court did and did not do and should have done, we next examine five different issues raised in the context of the litigation that have considerable significance for future regulatory takings jurisprudence. They are: (1) the so-called bright-line distinction between physical appropriation and regulation; (2) the distinction between facial and as-applied challenges; (3) the distinction between temporary and permanent takings; (4) the distinction between partial and whole takings of a landowner's property; and (5) the distinction between harm-prevention and benefit-conferring legislation. Most of these issues were raised by the case, but the Court's treatment was generally unsatisfying. We predict that future disputes will continue until many of the questions discussed below are cleared up.

The (Il)logic of Per Se Rules: Physical Appropriation Versus Regulation

The Tahoe-Sierra Court began its analysis by drawing a sharp distinction between regulations that result in outright physical occupation of land and those that merely affect land use, land value, or discrete property rights. As the Court notes, "when the government physically takes possession of an interest in property for some public purpose, it has a categorical duty to compensate the former owner."¹⁴ This duty exists whenever physical occupation is permanent and compelled, regardless of whether full fee ownership is taken or simply the right to possession, as would arise if a leasehold or easement is taken.¹⁵ The duty to compensate does not arise when the occupation is temporary or invited.¹⁶ On the other hand, regulations that merely affect a landowner's use of her land, without causing a physical occupation, are generally reviewed under the ad hoc balancing standard of Penn Central. The reason for the sharp distinction should be obvious; physical occupation, even through the mechanism of a regulation, is functionally no different from condemnation, while a restriction on development, use, or even sale does not devote the land to public use so long as some private use remains and the right to exclusive possession is not abrogated. Hence, zoning regulations, historic preservation restraints, prohibitions on building nuclear power plants on the San Andreas fault, and restrictions on developing sensitive beachfront land or building within a flood zone are all restraints on a landowner's use of land that might deny the highest and best use, but do not deny all use, and certainly do not directly infringe on a landowner's privacy and autonomy rights.¹⁷

Indeed, in Tahoe-Sierra, Justice Stevens remarks that this "longstanding distinction between acquisitions of property for public use, on the one hand, and regulations prohibiting private uses, on the other, makes it inappropriate to treat cases involving physical takings as controlling precedents for the evaluation of a claim that there has been a 'regulatory taking,' and vice versa."¹⁸ Logically, precedents creating per se tests for physical occupation are not appropriate when a regulation does not invite the public onto the land, such as when there is a temporary moratorium on development. Of course, the petitioners did not claim a physical invasion nor seek application of a per se rule on physical invasion. They instead asked for application of a different per se standard, the 100% economic loss rule articulated in Lucas. Justice Stevens' reference to the physical invasion cases really has nothing to do with Tahoe-Sierra, except to provide a nice counterpoint to ad hoc balancing or, perhaps, to suggest a test which would negate all other per se rules outside the physical invasion context. Thus, Justice Stevens may be setting up the Lucas per se rule for reversal.

Accepting that Justice Stevens need not have referred to the physical invasion cases, there remain questions about the existence and distinction of any line between physical appropriation and mere regulation. The 1979 decision in Kaiser Aetna v. United States¹⁹ profoundly blurs whatever line the Court seems to think exists. There, a private company invested a large amount of capital building a private marina and dredging a channel to reach the open sea, only to have the government claim that because the channel was now navigable, it had to be open to the public under the federal [32 ELR 11180] navigational servitude. Holding that a taking had occurred, the Court emphasized the government's extreme interference with a core property right, the right to exclude. The Court also stressed the reasonable, investment-backed expectations of the private company in building its marina, expectations dependent on the right to exclude. The Court, however, did not introduce a per se test based on physical invasions, nor did it refer to any case that could arguably stand for such a proposition. Instead, the case was decided using Penn Central balancing.²⁰

Thus, while Kaiser Aetna is often cited for the proposition that physical invasions are per se compensable, the decision more accurately reflects the Court's position that each prong of the Penn Central test, if implicated in an extreme and egregious manner, justifies compensation regardless of whether the other prongs are satisfied. Hence, if the interference with reasonable investment-backed expectations is sufficiently extreme, as in Kaiser Aetna, then that fact alone will justify compensation. Similarly, particularly egregious governmental conduct, such as direct interference with a core property right, justifies compensation, even without proof of economic loss or investment-backed expectations.²¹ As Justice Thurgood Marshall explained in Loretto v. Teleprompter Manhattan CATV Corp.,²² "when the 'character of the governmental action,' . . . is a permanent physical occupation of property, our cases uniformly have found a taking to the extent of the occupation, without regard to whether the action achieves an important public benefit or has only minimal impact on the owner."²³ Justice Marshall cited Penn Central for this proposition.

This may seem like a distinction without a difference. When the interference with the right to exclude or the character of the governmental action involves physical occupation, then compensation is required, regardless of the amount of economic harm to the landowner. Describing the standard as a per se test may seem to be a short-handed way of indicating that the government has gone too far under Penn Central balancing. Yet Tahoe-Sierra shows exactly why the distinction matters, for if we characterize the standard as a per se rule, the fact-finding is significantly different than if the case must proceed under Penn Central, even though it is obvious that physical invasion is a particularly egregious interference that will almost always be found to go too far. Kaiser Aetna and Loretto both provide examples of extremely egregious governmental action; but both relied on Penn Central, and thus presumably involved the fact-finding necessary to engage in ad hoc balancing. Divining a per se rule for physical invasions from two cases that relied on Penn Central seems problematic for several reasons. A per se rule is not necessary if Penn Central achieves the same result—compensation when interference goes too far. And, a per se rule actually causes more problems than it solves. It does not achieve the administrative efficiency per se rules are supposed to achieve, and it can be overbroad, squelching important public regulations that impose negligible to nonexistent burdens on landowners.

The existence of a per se rule will always create a desire by petitioners to fit their claim within its purview, as was the case in Yee v. City of Escondido,²⁴ in order to avoid the detailed showing necessary under Penn Central. Per se tests seldom simplify, and may complicate, litigation. In neither Yee nor Tahoe-Sierra was the per se rule applied, and in both instances the cost of litigation was probably no less than it would have been had the parties relied on Penn Central balancing from the beginning. In their haste to fit within a per se rule, the petitioners in both cases may have missed the chance to present a sound case for compensation which would have allowed them to aggregate the totality of interference caused by multiple governmental actions. Under Penn Central balancing, the dissent in Tahoe-Sierra would have been right in demanding that the Court consider the six years of development restrictions rather than the 32 months that were at issue pursuant to the per se test.

Moreover, it is not at all clear that all physical invasions should be compensated, regardless of the prior use of the property, the economic impact, the reasonable investment-backed expectations, or the character of the governmental action. Justice Antonin Scalia, in Lucas, noted that the Court would not allow the government to decree anew a physical occupation of land without compensation, "though we assuredly would permit the government to assert a permanent easement that was a pre-existing limitation upon the landowner's title."²⁵ Justice Scalia thus admitted that it is not the physical occupation per se that is compensable, but rather the gap between the government's action and the landowner's reasonable expectations or preexisting property rights. When, for instance, the impact is negligible and the land is already burdened with a public use, the additional burden may not be compensable. Similar results follow from the decisions in Nollan v. California Coastal Commission²⁶ and Dolan v. City of Tigard²⁷ in which public easements would have been justified, without compensation, had the essential nexus and rough proportionality tests been met, though both involved physical invasion. It logically follows from these exceptions that, where a great public harm is avoided, and under any reasonable balancing of private property rights and social utility no compensation would be due except for the fact that the right interfered with is the right to exclude, the per se physical occupation rule is overbroad.

The per se rule created in Lucas upon which the petitioners relied in Tahoe-Sierra is subject to the same critique as the per se physical invasion rule. The same end can be achieved using Penn Central, the rule does not lead to greater administrative efficiency, and it may be overbroad. Arguably, the per se rule developed in Lucas, for loss of 100% of economic value, may simply represent the economic impact prong of Penn Central taken to its extreme. Indeed, when economic impact is so significant as to deprive a landowner of all economic value, then it seems likely, under Penn Central, that compensation will be required, even if the other two prongs are not implicated. But [32 ELR 11181] Justice Scalia, in Lucas, did not rely on Penn Central. Instead, he cited to the facial takings test articulated in 1980 in Agins v. City of Tiburon,²⁸ which requires compensation whenever a regulation "does not substantially advance legitimate state interests . . . or denies an owner economically viable use of his land."²⁹ The Agins Court cited Nectow v. Cambridge,³⁰ a due process case, and Penn Central for this rule. Justice Scalia, however, writing in Lucas, asserted that the Agins Court had created a per se rule on denial of all economically beneficial or productive use of land. Acknowledging that the Court had never justified this 100% economic loss rule, Scalia posited that it is, "from the landowner's point of view, the equivalent of a physical appropriation."³¹ Therefore, he suggested, the government might as well have appropriated the land.

But while Justice Marshall in Loretto seems to have misrepresented Kaiser Aetna by using it to justify a categorical rule for physical appropriations, Scalia's new-found creation of a categorical rule in Lucas for 100% economic loss has even less justification and a weaker pedigree. Certainly, under Penn Central, if the economic impact is severe enough to require compensation, one need not care about the other prongs, nor about the worthiness of the defendant's goals; compensation will be required in any event. No per se rule is needed; rather, simply an understanding that as the evidence on any one prong logically moves toward complete interference or denial, the amount of evidence required for the other prongs decreases. Such an understanding retains the principled and thorough evidentiary requirements of balancing while recognizing that as one moves toward the extremes on any one prong, the other prongs become less important.

Furthermore, the 100% economic impact rule can also be overbroad and does not guarantee administrative efficiency. Had the petitioners in Tahoe-Sierra accepted the appropriateness of Penn Central balancing, they could have combined the moratoria periods with the injunction period to show greater interference over time, and they would have been able to show some economic impact, particularly as the uncertainty of possible future development extended over a seemingly unending period of time. By putting all their takings eggs in one basket, however, they litigated a case to the Court which they might have won at the trial court level had they done the fact-finding necessary to proceed under Penn Central. In addition to demonstrating the administrative inefficiency of the per se rule at work, the Tahoe-Sierra litigation may prove how the 100% economic loss rule can be overbroad. Some commentators have argued that Lucas reversed the Court's decision in Andrus v. Allard,³² where a prohibition on the sale of eagle feathers was held not to work a taking because the feathers could still be used for important cultural and religious purposes, if not for pecuniary gain. Destroying the market for eagle feathers by precluding their sale, however, was necessary in order to prevent commercial hunting of an endangered species. The harm that would result from the continued sale of eagle feathers, like the harm that would result from the continued pollution of Lake Tahoe, would be irremediable. But Andrus shows exactly why per se rules are a bad idea. Regulations designed to stop irremediable harm, such as the Migratory Bird Treaty Act or the Lake Tahoe Compact, are justified even when there is 100% economic loss because the petitioners' actions are the direct cause of the harm. A per se rule in the case of 100% economic loss does not allow for a critical balancing of the harm to be avoided against the full impact on the property owner and the property owner's role in causing that harm. The decision in Tahoe-Sierra indicates a sufficient narrowing of Lucas to permit a return to the important balancing necessary under Andrus, thus allowing courts and legislatures to weigh the importance of the regulation's goal against the economic impact on the property owner.

What Tahoe-Sierra shows quite clearly is the imprudence of per se rules, both because they trap unwary litigants who may have legitimate takings claims under Penn Central but hope to avoid specific fact-finding, and because as a matter of public policy per se rules are not a very good idea when a more nuanced test is available to determine the impact of land use restrictions. The physical invasion and 100% economic loss rules are unnecessary and counterproductive, and are both essentially extreme examples of each Penn Central prong. Penn Central balancing leads to the same end, without setting traps for litigants.³³ And despite the Court's desire to simplify matters and invent per se rules, one for each substantive prong, and hold that beyond a certain line on each prong the government may not go, per se rules are simply not necessary. Penn Central balancing will achieve the same goals while accommodating critical public needs such as the prevention of irremediable environmental degradation.

The lack of a clear line between physical invasion and mere regulation, despite Justice Stevens' insistence that such a demarcation exists, calls into question the logic of per se rules altogether. The notion that physical invasions are essentially condemnations, automatically requiring compensation, ignores the critical fact that the right to exclude is not absolute and that emergency personnel, law enforcement personnel, lawyers, migrant farmer aid workers, mobile home park tenants, war protestors, and a host of others may have a right to enter private property. Per se rules ignore the public purpose, as though a small physical invasion, in exchange for preventing great public harm is no different from an extreme invasion in exchange for little public benefit. Indeed, all per se rules preclude the consideration of significant public concerns and prioritize private property rights at all costs. Thus, while we applaud the Court's rejection of Lucas, we could only hope the Court will limit application of its per se rules and question their logic when the public's rights and goals are so noticeably absent from the compensation equation.

Facial Challenges Versus As-Applied Challenges

Just as the Tahoe-Sierra Court failed to demonstrate the primary distinctions justifying per se tests, it also neglected to [32 ELR 11182] reinvigorate an important distinction that would have gone a long way toward clarifying the muddied waters of takings jurisprudence, or even better, done away with the distinction altogether. Since the early 1980s, it has been received wisdom among takings scholars that as-applied challenges to land use regulations should be reviewed under Penn Central balancing while facial challenges should be reviewed under the test enunciated in Agins.³⁴ In Penn Central, the Court addressed the application of a landmark preservation ordinance to a particular structure in New York City and articulated a three-prong rule that focuses on the regulation's impact on a particular landowner: the character of the governmental action, the economic impact, and the interference with reasonable investment-backed expectations. In Agins, however, the Court addressed whether "the mere enactment of the zoning ordinances constitutes a taking,"³⁵ and enunciated a two-part test that looks at whether the state's action was legitimate or whether it denies an owner economically viable use of land. Although these tests arose in the context of different constitutional challenges, the Court has not maintained a clear divide. In fact, in the late 1980s, the Agins test was used in a number of important cases that were clearly as-applied challenges,³⁶ and, not for the first time, the Court has applied Penn Central to a facial challenge.³⁷

To be sure, the Tahoe-Sierra Court does not clearly state whether the constitutional validity of the moratoria themselves or the impact of the moratoria on each of the petitioners' parcels should be determined under Penn Central. However, the Court does at least gesture toward the different rules applied in the context of facial and as-applied challenges when Justice Stevens notes that "if petitioners had challenged the application of the moratoria to their individual parcels, instead of making a facial challenge, some of them might have prevailed under a Penn Central analysis."³⁸ This would seem to imply that the landowners should have brought as-applied challenges under Penn Central. However, Justice Stevens concludes the majority decision by stating that "the interest in 'fairness and justice' will be best served by relying on the familiar Penn Central approach when deciding cases like this, rather than by attempting to craft a new categorical rule."³⁹ What is unclear is whether his reference to "cases like this" means cases involving facial challenges generally, or cases involving as-applied challenges that were erroneously brought as facial challenges.

To further confuse the issue, why was the petitioners' facial challenge not decided under Agins? The two-part Agins test asks only whether the ordinance, on its face, denies an owner economically viable use of the land. Development moratoria certainly seem to deny an owner economically viable use of the land for the period of the moratoria, though the majority is also correct in stating that once the moratoria are lifted, economic value returns. Reviewing the case under Agins might have allowed the Court at least to reach the next question, namely whether the moratoria constituted a temporary taking. The Court, however, failed to hold that facial challenges are to be reviewed under Agins, or that all regulations, whether in facial or as-applied challenges, are to be reviewed under Penn Central. Thus, while the Court acknowledges some distinction between facial and as-applied challenges, it has left us with an ambiguity that continues to permit the commingling of these two very distinctive tests.

This criticism is motivated by more than the obsession of scholars and commentators to make order out of chaos; if the Court does not want separate tests for facial and as-applied challenges, it may certainly reject the idea. But to refer to the different types of challenges and then commingle the tests irks more than just a few academics. Moreover, while at one level the commingling appears to be a subjective preference by different justices to use whichever test he or she believes will provide the desired outcome, at another level it seems the distinction simply cannot stand. Facial challenges are decidedly problematic. First, the economic impact analyzed under the Agins test logically calls for a more detailed analysis of the loss of value on the regulated property than due process review of the legitimacy of a state's actions. All regulations will affect property values in one way or another. But only those regulations that deny economically viable use meet the Agins test. Yet isn't that type of more detailed analysis, above and beyond what is necessary for due process review, ultimately analyzing the effect on particular parcels of property? Short of taking a particular species of property, such as, perhaps, eagle feathers, and facially denying all uses that give economic value to the property, the simple idea of a facial challenge that does not have to look at the effects of a regulation on particular pieces of property seems incomprehensible. Thus, an analysis of the impact on an individual property owner is necessary even in a facial challenge.

We are not saying that the idea of a facial challenge is illogical because under the Agins test one has to look at the impact on individual landowners to determine if the economically viable use prong is met; rather, it is illogical because one simply cannot evaluate a regulation that on its face "takes" property from those who are affected by it without an analysis of the effects on individual property owners. In other words, the very definition of a "take" implies that only some owners lose their property and not others. No court can separate out those owners whose property is taken from those whose property is not taken without an analysis of the impact on the individual landowner, and doing so ultimately undermines the distinction between facial and as-applied challenges. Because a takings claimant must have standing, she must show that her property was impacted by the regulation and that other similarly situated owners were also impacted. But the analysis needed to determine who all other similarly situated owners might be ultimately rests on individual impact. And individual impact is the heart of as-applied challenges. We suggest that the distinction between facial and as-applied challenges breaks down [32 ELR 11183] because the facial analysis ultimately reduces to an as-applied analysis.

Indeed, we are left to wonder whether Agins is now moribund as a facial test, or whether its sole contribution to takings doctrine will be to revive substantive economic due process analysis within the takings calculation. The connection between Agins and substantive due process has occurred primarily in two ways. First, the Agins test bears an uncanny resemblance to the traditional due process rule articulated in Lawton v. Steele,⁴⁰ which analyzed economic legislation in terms of the legitimacy of the state's action and the means/end fit of the legislation. Although this heightened review of economic legislation was repudiated in 1934 in Nebbia v. New York,⁴¹ we have seen a gradual reinvigoration of heightened review in certain takings cases through a standard hauntingly similar to the elevated due process test that was used in Lawton. This heightened review has occurred in the exactions cases, Nollan and Dolan, in which the Court applied an intermediate level of scrutiny to governmental exactions. Second, substantive economic due process has been revived in the takings analysis through what appears to be an elevation of certain "core" property rights to a level approaching constitutionally protected fundamental rights.⁴²

In both Nollan and Dolan, the petitioners brought as-applied challenges to the exaction requirements, but the Court used Agins and not Penn Central to reach an analysis of the legitimacy of the government's actions. While the Agins test, insofar as it is restricted to facial challenges, appropriately reviews the legitimacy of the government's actions, there is no reason to analyze the government's actions in as-applied takings challenges, especially under heightened levels of review. As-applied challenges presume the legitimacy of the government's action and simply consider whether the regulation has disproportionate impact on a particular landowner which he or she should not be asked to bear. The proper analysis, consistent with the Court's ruling in Tahoe-Sierra, is that as-applied challenges should focus exclusively on the particular effects on the landowner.

The second way in which substantive economic due process has reared its head is through Justice Scalia's use of the Agins test, in Lucas, to raise the status of certain core property rights by highlighting those rights traditionally associated with fee simple ownership of land and granting them greater protection from government interference than other property rights. Justice Scalia argued that traditional property rights, such as the rights to exclude, alienate, possess, use, and develop land, have been historically less open to regulation than similar rights in personal property or less important real property rights.⁴³ Such an elevation hearkens back to the notorious Lochner v. New York⁴⁴ decision, in which a maximum hours labor law was struck down because it interfered with sacrosanct liberty and property rights.⁴⁵ In talking about "core" property rights, and providing them greater protections than ancillary property rights, Justice Scalia is attempting to create the same sort of fundamental/nonfundamental rights distinction in the economic sphere as currently exists in the liberty sphere of due process jurisprudence.

The Agins test, when limited to the context only of facial challenges, does justifiably analyze the motives and policies behind the state's actions. But it is not clear that such analysis properly belongs in takings review of as-applied challenges. To the extent the Court can restrain the Agins test to facial challenges, it will dramatically clarify matters for the lower courts and it will hopefully stem the importation of heightened due-process-type review into takings cases by way of Agins. While the Tahoe-Sierra Court had an opportunity to soundly reaffirm the distinction between as-applied and facial challenges, the Court did not use Agins to analyze the petitioners' facial challenges. The Court also did not explain that the proper course of litigation should have been as-applied challenges under Penn Central. The failure to be explicit may permit lower courts and the high Court itself to continue to use Agins inappropriately in order to elevate scrutiny into the legislative purpose and to make certain core property rights nearly inviolable in the takings context when they properly belong in the due process context.

Temporary Versus Permanent Restraints

While the Tahoe-Sierra Court rejected the claim of compensation for temporary restraints, at the same time it sidestepped the real issue raised by temporary takings doctrine. Since 1987, when the Court decided First English,⁴⁶ regulations that result in temporary takings of property, at least theoretically, have required compensation. But while the Tahoe-Sierra Court distinguished First English so as to deny compensation for these temporary moratoria (which certainly seemed to qualify for compensation under First English),⁴⁷ it did not clarify when First English compensation would be required. We can only infer, therefore, that First English has been narrowed, but we remain somewhat [32 ELR 11184] in the dark about the new scope of the temporary takings doctrine.

First English was an unusual case. After a flood destroyed a church camp, the county prohibited it from rebuilding in its current location. The prohibition was explicitly temporary and yet the plaintiffs sought compensation and not invalidation of the ordinance. The state of California had held, however, that a landowner had to seek invalidation of a regulation first, and only if that was denied, could she then pursue a compensation claim.⁴⁸ The question on appeal, therefore, was whether a state could limit remedies in takings challenges to invalidation in order to avoid paying out compensation. The Court said no, holding that even if legislation is eventually held invalid, the duty to compensate arises when the regulation is passed, not when it is adjudged to require compensation. Even if the regulation is in place for only a short period of time, compensation will still be required. The confusion arises, however, in the use of the term "temporary." The Court stated that "invalidation of the ordinance or its successor ordinance after this period of time, though converting the taking into a 'temporary' one, is not a sufficient remedy to meet the demands of the Just Compensation Clause."⁴⁹ A "temporary taking," however, does not refer to a regulation meant to last a short period of time, but instead to a permanent regulation that is amended or shortened because of legal challenges. The Court's clear meaning is that a governmental body may not rely on invalidation or amendment alone to meet its Fifth and Fourteenth Amendment obligations. Removal of the restrictions on land, after a legal challenge, will not satisfy the constitutional obligation to compensate when the restrictions go too far.

Ironically, however, the ordinance in First English was subsequently found not to work a taking because of the immense importance of safety measures such as prohibitions of development within floodplains,⁵⁰ so the issue of subsequently amended regulations was not before the Court. Notably, the cases cited by the Court involving temporary takings of property rights, such as the takeover of certain leasehold interests, or the temporary nationalization of the steel mills and automobile plants, were for physical invasion for war-time emergencies and not temporary deprivations of other property rights, such as the rights to alienate, develop, or use.⁵¹ These precedents all involved physical invasion onto a limited property interest akin to a leasehold or an easement and were held to require compensation even though the occupation was not permanent. Extending these precedents, Justice William H. Rehnquist, writing in First English, articulated a rule that temporary takings must be compensated, even when the so-called deprivation might only be a temporary ban on development and not a physical invasion. Thus, First English did extend the notion of temporary takings to include nonphysical invasions. But it did so only for retrospectively temporary and not prospectively temporary takings.⁵² The Tahoe-Sierra court, surprisingly, rejected First English as applied to prospectively temporary takings.

Not unreasonably, the petitioners in Tahoe-Sierra thought that if a temporary ban on development in a floodplain might give rise to compensation, so too might a temporary ban on development around Lake Tahoe. But the petitioners' mistake was in not realizing that the First English rule had nothing to do with the facts of that case, but rather sprang fully developed from Justice Rehnquist's brow in a fit of unwarranted dicta.⁵³ The Tahoe-Sierra Court distinguished First English by explaining that it essentially asks two questions: is there a taking and, if so, how long does it last? Only if the answer to the first question is "yes" does the temporary taking rule kick in, requiring compensation even if the taking is not permanent. The Tahoe-Sierra Court answered the first question in the negative, thus not reaching the question of compensation for only a temporary period of time. On one reading, the Court is focusing on a distinction without a difference; on another view, it is simply using specious logic. Only on a third reading, of which there is absolutely no reference made, can the distinction stand.

The Tahoe-Sierra Court interpreted First English to stand for the proposition that if a regulation works a taking, compensation would be required even if the regulation is in effect for a short period of time, but if it does not work a taking, then compensation is not required. But the fallacy is that a taking is defined as a regulation that requires compensation. So at one simplistic level, the compensation requirement cannot be separated from the takings definition, and the Court's attempt to bifurcate the issue makes no sense. At the same time, the Court is speciously putting the cart before the horse. Because the Court in First English did not find that a ban on development in a floodplain worked a taking, the issue of whether a taking lasting for a temporary period of time requires compensation was not before it. And if it had been, we would return to the first point, that if the regulation is a taking, it by definition requires compensation, regardless of the temporal nature of the restriction. But on a third, more nuanced reading, there is a profound distinction between First English and Tahoe-Sierra, and that is the seriousness and sincerity of the regulation, an important point completely sidestepped in the latter opinion.

A quick read of First English shows that the Court was principally interested in the unfairness to a landowner whose land is dramatically affected by a regulation, who sues seeking invalidation and/or compensation, and then is denied all remedy when the governmental agency amends the regulation just before a final decision is to be rendered on [32 ELR 11185] the takings claim. Even worse, the Court believes, is the state that requires invalidation rather than compensation for all regulations that go too far.⁵⁴ If agencies are able to get away with passing laws that have significant impact on landowners, then amending only those which landowners dispute and only when the courts are poised to order compensation, government agencies would have no incentive to narrowly tailor regulations to minimize the impact on private property. The possibility of bad faith and governmental overreaching justifies a rule of temporary takings in cases in which an agency should have known its actions would work a taking, it acts anyway, and then tries to avoid having to pay compensation by simply amending the regulation. Although this is arguably beyond the facts presented in First English, for the regulation there turned out not to effect a taking, the Court nevertheless saw the necessity of creating a disincentive for heavy-handed state actors who were choosing to regulate now and amend, rather than pay, later. Had the Tahoe-Sierra Court been explicit that First English's rule on temporary takings applies only in this quasi bad-faith situation, then its refusal to apply First English to these moratoria would have made sense. But the Court instead sidestepped the issue and left everyone wondering how a temporary ban on development could work a taking in one case and not in another.

We are sympathetic to the petitioners' dismay at the Court's unsatisfying treatment of First English. However, an up-front temporary moratoria to prevent substantial harm is not the kind of bad-faith governmental activity the Court sought to prevent through its temporary takings rule. Thus, we believe the Tahoe-Sierra Court correctly declined to follow First English, though we would have preferred the Court be more explicit in defining those situations in which temporary takings might be implicated as those in which "some sort of improper purpose or insufficient justification"⁵⁵ is alleged. Had the Court been explicit about this bad-faith element, the petitioners would not be scratching their heads wondering how a temporary building moratoria could potentially give rise to compensation in First English but not in their case. Had the Court been explicit, it would not have created a new dilemma for courts in determining when normal permit delays might go too far. And finally, while bad faith per se may not be the exact criteria the Court is envisioning in these temporary takings cases, Tahoe-Sierra provided a good opportunity to elaborate on the crucial difference between heavy-handed regulation, such as that found in Lucas, and reasonable, good-faith attempts to prevent great harm. The petitioners can understandably ask whether it is fair to compensate landowners who complain about regulatory actions and get the law changed but not those who are just as restricted by a development ban that is on its face temporary, especially if the effects on the landowner are the same in both scenarios.

Moreover, the decision in First English illustrates the way in which takings doctrine has been complicated by due process issues and incoherent distinctions between facial and as-applied challenges. The First English Court correctly focused on the way in which invalidation and compensation have become intertwined. California's position in Agins—that a landowner must bring a claim for invalidation, amendment, or declaratory relief first before a compensation claim would be ripe—imposes on landowners the duty to test the validity of legislation even when doing so would be a waste of time. It would seem self-evident that there are essentially three considerations in most takings disputes. The first is whether, on its face, the ordinance or regulation is a legitimate state action. Conceivably, this question would be answered under traditional substantive economic due process grounds using rational basis review. If the answer is "no," the regulation would be struck down; if "yes," the regulation could stand. The second question is whether the impact on a particular landowner is so severe from this otherwise legitimate regulation as to implicate a duty to compensate. Under Penn Central balancing, we would focus on whether the regulation goes too far with respect to this particular landowner so as to require compensation. If the answer to that question is also "yes," then the government has the option of compensating the landowner, amending or rescinding the regulation, or providing a special exception to the landowner. The value of the compensation would differ, depending on the option chosen by the government. If the state's purpose is important enough to justify the impact on the landowner, then compensation would be due for a permanent regulatory taking. If the government chooses, instead, to amend, rescind, or grant a special exception, however, the compensation would be less, as the duration of the restriction would have been temporary.

As discussed above, however, the distinction between facial and as-applied challenges, which looks to questions about the legitimacy of the state's action, confuses the takings analysis. While the Penn Central test does inquire into the character of the government's action, it does so with an eye toward the impact on the landowner. The legitimacy of the state action prong of the Agins test and the test for substantive due process both ask about the state's purpose and justification for its regulations and are therefore appropriate locations for inquiry into the good- or bad-faith motives of regulators. But purely within the takings analysis, whose remedy is compensation, the motives of regulators are potentially irrelevant. Thus, to the extent First English brings in an analysis of motives or analyzes the state's purpose for sufficient justification, it again breaks down the takings and due process distinction. And once again, the Tahoe-Sierra Court found its way through the muddy waters, but it certainly did not settle them.

Harm Prevention Versus Benefit Conferring Regulations

The Tahoe-Sierra Court missed yet another opportunity to resolve an issue that has become confused since its 1992 decision in Lucas: the distinction between harm-preventing and benefit-conferring regulations. Justice Scalia stated in Lucas that it is only a matter of semantics and skilled argument whether a regulation is articulated as conferring a benefit or preventing a harm. A regulation that prevents construction on critical beachfront property, for instance, could be seen as preventing harmful erosion caused by the construction, or it could be seen as conferring a benefit on neighbors or the public by asking Mr. Lucas to devote [32 ELR 11186] his land to maintaining a healthy beach. As Justice Scalia explained:

When it is understood that "prevention of harmful use" was merely our early formulation of the police power justification necessary to sustain (without compensation) any regulatory diminution in value; and that the distinction between regulation that "prevents harmful use" and that which "confers benefits" is difficult, if not impossible, to discern on an objective, value-free basis; it becomes self-evident that noxious-use logic cannot serve as a touchstone to distinguish regulatory "takings"—which require compensation—from regulatory deprivations that do not require compensation.⁵⁶

Because there is no distinction, according to Scalia, there is then no principled way to define legitimate exercises of police power which do not require compensation as opposed to regulatory takings that do. But Scalia's logic erroneously assumes that all regulated behavior is independently innocent, and that the fact that it causes harm is not a function of the behavior, but of the neighboring uses that are harmed. This is akin to saying that swinging one's fist is perfectly innocent behavior, and that when your nose happens to get in the way of the fist, the blame for its being broken cannot be attributed in any reasonable manner to the action. This is a nuisance model of reasoning which assumes it does not matter if your broken nose resulted from my seeking you out and striking you for no reason, or because you were trying to catch my attention while I was warming up with a boxing bag. Tahoe-Sierra, however, illustrates the difference and the Court could have used this opportunity to reject Scalia's verbal semiotics.

Fortunately, the common law has not seen fit to use nuisance as the only method for regulating competing land uses. For there are, indeed, certain actions that are inherently harmful and have been held to be so, regardless of whether neighboring uses are impeded. Polluting rivers and air, improperly dumping radioactive waste, removing lateral and subjacent support for neighboring land, and breeding pestilence are all noxious uses of land that cause harm regardless of who owns neighboring land and the nature of the harm inflicted on that land. Justice Scalia's support for the proposition that harm-preventing and benefit-conferring are flip sides of the same coin are cases involving regulations that prohibited some harmful uses, such as distilling alcoholic beverages or brickmaking, while permitting other nonnoxious uses.⁵⁷ But he failed to cite Miller v. Schoene,⁵⁸ in which the Court upheld a New Jersey law ordering cedar trees be destroyed in order to save valuable apple orchards, Mugler v. Kansas,⁵⁹ in which the Court upheld a Kansas temperance law that rendered beer-making equipment valueless, or Andrus v. Allard,⁶⁰ in which the Court upheld legislation that prohibited the sale and all economic value of eagle feathers. These omitted precedents show that there have been numerous cases in which property was destroyed or rendered valueless and yet no compensation was required because the harm to be prevented justified the burden on the property owner, harm that was a direct result of the property owner's actions.

Justice Scalia relies on Joseph Sax's famous critique of the harm-prevention/benefit-conferring distinction, that "the problem . . . is not one of noxiousness or harm-creating activity at all; rather it is a problem of inconsistency between perfectly innocent and independently desirable uses."⁶¹ The problem with Sax's critique is that it ignores the critical fact in Miller, Mugler, Andrus, and Tahoe-Sierra, which is that the activity being restricted is not perfectly innocent and independently desirable, but rather causes substantial harm. This is the distinction between nuisance and the police power. Nuisance weighs the benefits of two competing but incompatible land uses, and determines that if the harm caused is less than the benefit gained by the activity, then the use may continue. But certain activities cause harm regardless of whether they interfere with another socially beneficial activity and they may be prevented under the police power without regard for the impact of the restriction. Radioactive waste dumped in the middle of the desert is a social harm even if there is no neighboring use being interfered with, because it means that there can never be a neighboring use, thus rendering the land around it permanently unusable. The fact that harm can exist does not necessarily mean that we should prohibit all harm-producing activities; it does mean, however, that the harm side of the equation can, and sometimes should, be evaluated independently of the interference caused to other lands. In a world in which the law must make decisions based on normative theories of human flourishing, it is dangerous logic to assert that the police power does not allow for the regulation of behavior that causes death and destruction because the prohibition of that behavior confers the benefit of life on others.

Moreover, Justice Scalia fails to recognize that as the amount of harm caused by a prohibited activity increases, the likelihood that the landowner will receive compensation logically decreases. In San Diego Gas & Electric Co. v. City of San Diego,⁶² for example, the Court upheld the denial of permits to construct a nuclear power plant along the San Andreas fault. Although the land in the latter case continued to have some use or value, no one would imagine that the state could not prevent building a nuclear power plant along the worst fault line in America unless it paid the owner not to build. Despite Scalia's reasoning in Lucas, a very clear distinction can be made, and has been made, between harm-preventing and benefit-conferring regulations. Justice Harry Blackmun is certainly correct, in his dissenting opinion in Lucas, that "no one can obtain a vested right to injure or endanger the public."⁶³

Indeed, it reaches the point of absurdity to suggest that a landowner must be compensated whenever she is prevented from potentially causing harm to other persons or their property. [32 ELR 11187] Should the public be forced to pay landowners to not build a church camp in a floodplain, to not build a nuclear power plant on a fault line, to not pollute a public aquifer, or not discharge poisonous gases into the air? On balance, are not these foregone opportunities merely the cost of living within a civilized and populated society? No one is paid not to commit a tort or not to breach a contract; why, then, should property rights be different? The answer seems self-evident; they should not be different. But recognizing that harm prevention and benefit conferral are not flip sides of the same coin does not answer the problem raised in Tahoe-Sierra of how to regulate an activity that many others have done before, like building a house on a beachfront lot?

The moratoria at issue in Tahoe-Sierra provide clearer examples of harm prevention than most other land use regulations aimed at environmental preservation. In Lucas, for example, it was not the building of the residence along the beach that directly caused the beach erosion. Tidal waves and hurricanes were, instead, the direct cause of the harm. On Lake Tahoe, however, home construction directly causes the harm to be prevented: the erosion of soil into the lake. Because the construction of impervious surfaces directly causes the harm sought to be prevented, the landowner cannot complain when such activities are prohibited, any more than a polluter can complain when told he may not pollute. While it is true that mere human existence on land causes some harm, and construction of residential buildings is viewed as a social good deserving of significant protection, one may not build a home if public harm will directly result.

Tahoe-Sierra also illustrates the "tipping" problem. Although one house constructed near Lake Tahoe will not cause its waters to become opaque, each contributes a small percentage to the overall problem. When the number of buildings becomes too great and the runoff exceeds that which the lake can handle, then each new house built becomes an environmental threat. But is each new house any more a threat than the ones previously built? Only insofar as each new house causes the runoff from the older ones to become environmentally degrading can we say that any individual house causes harm. The same is true with beachfront erosion,⁶⁴ privatization of beachfront property that blocks the public's view and access to the beach,⁶⁵ and a host of other land use activities that society is forced to regulate more and more heavily as an increasing number of people engage in it. One could argue that the tipping problem is essentially a matter of the cost of doing business becoming more expensive. If the lake can handle 200 homes without degradation, and you want to build the 201st but are prohibited from doing so, there still remain 200 homes available for you to purchase. Thus, while the petitioners would like to build their own homes on their own land near Lake Tahoe, even a permanent moratorium does not prevent them having a home in the area. It simply prevents them from having a home on the land they currently own. They may always sell their lots and buy ones on which are situated preexisting homes. And although the value of the undeveloped lots may dramatically decrease in the presence of a moratorium, while the value of the preexisting lots may skyrocket, it is not entirely clear that everyone is entitled to use their land in ways that maximize its value, or that land should be an investment guaranteed to go up in value. Not only does the moratorium not prohibit the human activity the petitioners desire, it allows for as much of that activity as the environment will sustain without permanent damage. Is not a landowner who asks for more essentially asking the public to absorb the externalized costs of her activity?

The homeowner of the 201st home on the lake will point out, however, that surely it is benefit-conferring on a preexisting landowner to allow her home to use up the buffer of environmental degradation the lake can handle while not allowing subsequent owners to do so, because the additional uses will tip the lake. And if the law's only relevant concern is economic value, the answer is yes. It is a windfall. But maintaining or increasing property values for preexisting uses is not a primary function of the police power in environmental and land use regulation when there is clear harm prevention accomplished by the regulation. At the same time, there is no sense in having everyone's property values decrease as a result of allowing overconstruction. And certainly, balancing the scales of property values and environmental damage is properly a legislative function. But to say that there is no distinction between harm-preventing and benefit-conferring is dangerous. While a benefit will always be incidentally conferred by a harm-preventing regulation, it is not true that harm prevention will always incidentally occur from a benefit-conferring regulation. Moreover, where the harm prevention is serious enough to justify land use restrictions, the Takings Clause is not the place to analyze the indirect benefits conferred on other landowners. That analysis should be left to a legislative body subject to judicial oversight on substantive due process grounds.

If, in some utopian world, we could reach the point where all harm could be confined to private property, then harm-preventing justifications for land use regulations might lose their cogency. But until we reach that point, harm-preventing regulations cannot be analyzed under the same kind of balancing of innocent activities that we engage in when deciding nuisance cases, for social utility has one absolute end: the preservation of human life. While the Court may be reluctant to identify home construction as a hazardous activity for which strict liability should be imposed, the law's recognition that certain activities cause harm calls into question Scalia's rather post-modern attempt to reduce all human activities to a value-free balancing of discursively innocent events.

Parcel as a Whole—Temporal, Physical, Functional

While the Court in Tahoe-Sierra may have lost many opportunities to clarify several areas of takings jurisprudence, the majority did an excellent job of reaffirming the Court's commitment to the parcel-as-a-whole rule.⁶⁶ There are at least three ways in which takings petitioners have attempted to segment their property interests. They have argued that a taking of airspace rights or subsurface rights is a taking of a [32 ELR 11188] physical interest in their land.⁶⁷ They have also contended that any limitation on development is a taking of 100% of the physical land being restricted.⁶⁸ Finally, landowners have alleged that a particular property interest, one stick in the bundle of sticks comprising fee simple ownership, can be taken.⁶⁹ For example, when the government requires the dedication of a strip of land for a public walkway or bike trail, an easement is being carved out of the fee and compensation for that easement is due.⁷⁰ Similarly, landowners have submitted that temporary physical possession is a taking of a temporal interest, such as a leasehold for a term of years.⁷¹ Cutting off a life estate or a future interest would also constitute a taking of a temporal interest. But can all of these interests be segmented? The Court in Tahoe-Sierra says "no."

The taking of the right to possession or the right to exclude—such as a temporary leasehold or an easement—may be segmented because they involve compelled physical invasion.⁷² Despite our own concerns with the physical invasion categorical rule discussed earlier, the Court has held that a compelled physical invasion is a per se taking, so any temporary or partial taking that involves physical invasion must be compensated. But short of a physical invasion, the Court has resisted attempts to segment certain property rights by landowners hoping to show a 100% taking of just that right. Thus, the taking of an easement caused by airplane flights in the airspace of one's land is compensable, but the destruction of a future interest through the operation of a state's marketable title act is not compensable.⁷³ Similarly, the destruction of the full fee ownership is compensable, but not merely restrictions on the right to develop.

In Tahoe-Sierra, the Court and the lawyers for both sides spent a significant amount of time during oral argument trying to determine whether the taking of a leasehold, which is a temporal interest in land, is or is not distinguishable from a temporary moratorium.⁷⁴ If we consider that the taking of a leasehold interest usually involves a physical invasion, then the distinction becomes clear. Absent physical invasion, all dimensions of the property must be viewed in their entirety. Thus, "logically, a fee simple estate cannot be rendered valueless by a temporary prohibition on economic use, because the property will recover value as soon as the prohibition is lifted."⁷⁵ If we except out the physical invasion cases, then all other regulatory takings must be determined according to the impact of the regulation on the entirety of the landowner's property rights.

Our first concern with the Court's rule is that it fails to adequately reject value as the critical indicator of property for purposes of the takings calculation. The district and circuit courts both distinguished between value and use as they pertain to the economic impact/viable use elements of the takings analysis. While the district court noted that value might exist even when all viable use is destroyed, as in land zoned undevelopable for conservation purposes which yet has value to the Nature Conservancy or the Sierra Club, it held that use trumped value for takings purposes.⁷⁶ Thus, the lack of viable use, even while retaining some economic value, was held to satisfy the Lucas 100% economic loss rule. The Ninth Circuit reversed, however, on the grounds that value, not use, is the key takings factor, but finding that not all value was destroyed in this case because future development was possible.⁷⁷ The Supreme Court affirmed the view that Lucas was about loss of value, not use, though it failed to settle the underlying use/value dispute in the lower court decisions.

There are numerous ways in which the lack of a clear line between use and value create problems in the takings analysis. Focusing on value, presumably fair market value in some sort of moderately robust land market, encourages segmentation by landowners. They are encouraged to sell their marketable portions of property, which leaves them holding just the "valueless" remainder for which they make a takings claim. This voluntary action should not be ignored. Value should be calculated over time, recognizing all of a landowner's property holdings and with an eye toward a reasonable rate of return on investments. Whether we look only at value at the present time, or value over time, however, we should probably reconsider the law's preferential treatment of land as a unique entity deserving of special protections. Many of the takings cases of the past two decades show quite clearly that, for many people, land is a fungible commodity little different from widgets, stock, or hay bales. Regulations of stocks generally do not implicate the Takings Clause, yet regulations of land do. The parcel-as-a-whole rule can help prevent land's special protections from running amok, but only when value does not swallow the entire takings calculation.

Additionally, like Justice Blackmun, we have a hard time imagining that a piece of beachfront land can be rendered entirely valueless simply because one cannot put multi-million dollar homes on it.⁷⁸ Value is a factor too prone to easy manipulation. The parcel-as-a-whole rule should keep us away from relying solely on value, especially since it seems more a matter for the compensation side of the equation than the takings side. Just as value alone is not the central factor in the economic impact prong of Penn Central balancing, and economic impact alone should not be the central factor in any takings analysis, we need the parcel-as-a-whole rule to preserve the essential character of balancing: the fact that balancing looks to more than one factor. Value alone should not predominate.

Because one of the prongs of Penn Central balancing is the economic impact, courts must analyze property values [32 ELR 11189] and determine reasonable rates of return on land-based investments, but it should not be the only consideration. Consider last year's decision in Palazzolo v. Rhode Island.⁷⁹ In that case, Palazzolo was not allowed to build on 17 of his 18 acres of wetlands, though the value of that one acre, adjusted for inflation and appreciation, may still have netted him a reasonable return on his investment. Certainly, Palazzolo would make more money if he could fill his 17 acres of wetlands and put 74 houses on his 18 acres. Indeed, he estimated that doing so would net him over $ 3 million. But if he could not fill the wetlands, and could only develop the single upland parcel, his return would be $ 200,000. Every developer wants to make money, preferably lots of it, on real estate development. But to what extent should the Takings Clause ensure a return on land investments when no such guarantee exists for any other business venture?

This critique of the importance of value to the takings equation supports the Court's affirmation of the parcel-as-a-whole rule because it points out the true concern for most petitioners, the fact that land use restrictions prevent them from making a windfall on development. To the extent they want to maximize development in order to maximize profits, their attempts at segmenting the property interests should be resisted. Moreover, a reasonable return on investment can be protected through the economic impact prong of Penn Central balancing without jeopardizing important land use restrictions. The problem is that most developers are not content with a 6% or 10% return on investment, especially since they were receiving many times that rate on development in the 1980s and 1990s. It is important that the Court resist arguments that regulations that limit the extravagant appreciation of land values in the last two decades work a taking because landowners will only receive a modest return on their investment.

Moreover, a landowner's voluntary actions should not be allowed to upset the takings calculus. For instance, a landowner who voluntarily reduces her property until she is left only with the heavily regulated parcel should not be able to come to court asking for compensation for the entire undevelopable parcel when it had constituted a small fraction of the original amount of land she developed. For instance, what if Palazzolo had developed his 1 upland acre and sold it for $ 200,000, more than recovering the initial cost of all 18 acres of land, adjusted for inflation and appreciation? He is then left with only the 17 acres of wetlands that are undevelopable. He claims a taking of 100% of his land because the entire parcel he now owns is unusable. Should his voluntary action of developing the valuable part of the land and selling it allow him to make out a takings claim for the "valueless" part that is left? Consider also the developer who is told he can develop 90% of his land, but must keep 10% as open space. He then proceeds to put houses on 90% and sells all of that land, keeping only the original 10%. Although he purchased the larger parcel before the open-space regulation was enacted, his subsequent sales have left him with only the heavily regulated land that is now undevelopable. Can he now claim that there is a 100% taking of his entire parcel? That would appear to be precisely what happened in Lucas and Pennsylvania Coal Co. v. Mahon.⁸⁰ In Lucas, the petitioner's company developed many lots on the Isle of Palms, and then sold to himself individually the two heavily regulated lots. When the regulations were increased, he could argue a taking of 100% of his economic value in those lots, even though he had owned a much larger parcel of land, the vast majority of which had been developed. Similarly, the Pennsylvania Coal Company purchased fee simple title to their land, then sold off the surface estate, retaining only the support and the mineral estates. By doing so, their voluntary act made themselves vulnerable to regulations prohibiting subsidence of land owned by others. Had they retained the surface interest themselves, they could have extracted all the coal without regard for surface subsidence. But by selling off the surface estates, they limited their ability to maximize coal extraction without causing harm to the property rights of others.

The parcel-as-a-whole analysis must acknowledge, at some level, the voluntary actions of landowners that make themselves vulnerable to regulation in ways that would not, in the absence of those actions, give rise to a viable takings claim. Although the Court in Tahoe-Sierra has affirmed the parcel-as-a-whole rule, it has not gone far enough in offering guidance about the relation between value and takings, nor has it recognized the importance of voluntary actions by landowners in creating their own takings problems.

Conclusion

While the Court in Tahoe-Sierra made a valiant effort to stop the blind rush toward protections of property rights at all costs which had characterized the Court's takings jurisprudence in the previous decade, it left muddy many of the more nuanced issues implicated in the case. The foregoing critique should be understood as a friendly encouragement to the Court to address some of the more difficult theoretical issues that have arisen in the gaps left open by the shift in the Court's majority. We firmly believe that the U.S. Constitution does not require that the public accept the cost, either in environmental damage or compensation payments, of harmful land uses. There are no vested rights to injure the public. Penn Central balancing, while admittedly costly to administer, fairly weighs the interests of all. The Court's reaffirmation of the appropriateness of the Penn Central test is incredibly important, as categorical tests tend to overlook the public's interests, needs, and rights. At the same time, lower courts are in dire need of guidance on the parameters of per se tests, clearer rules on as-applied and facial challenges, and fuller explanation of the underlying criteria for temporary takings. In addition, the Court should seek a reconciliation of the harm-preventing function within the police power, and articulate more fully the contours of the parcel-as-a-whole rule. To the extent that Tahoe-Sierra starts the Court down that road, we applaud their progress. But we hope that when future situations arise, the Court will take the opportunity to clarify the waters a bit more.

1. 122 S. Ct. 1465, 32 ELR 20627 (2002) (subsequent citations are to 32 ELR).

2. 438 U.S. 104, 8 ELR 20528 (1978).

3. 505 U.S. 1003, 22 ELR 21104 (1992).

4. 482 U.S. 304, 17 ELR 20787 (1987).

5. This distinction seemed to exist in the early 1980s, but had become quite muddied after Lucas and the exactions cases of the early 1990s. Facial challenges appeared to be analyzed under the test articulated in Agins v. City of Tiburon, 447 U.S. 255, 10 ELR 20361 (1980), while as-applied challenges appeared to be analyzed under the three-prong ad hoc balancing of Penn Central. The exactions cases, Nollan v. California Coastal Comm'n, 483 U.S. 825, 17 ELR 20918 (1987) and Dolan v. City of Tigard, 512 U.S. 374, 24 ELR 21083 (1994), however, muddied that tidy distinction by deciding as-applied challenges using the Agins test.

6. See Carol Rose, Mahon Reconstructed: Why the Takings Issue Is Still a Muddle, 57 CAL. L. REV. 561 (1984); J. Peter Byrne, Ten Arguments for the Abolition of the Regulatory Takings Doctrine, 22 ECOL. L.Q. 89 (1995); John Bristow, Eastern Enterprises v. Apfel: Is the Court One Step Closer to Unraveling the Takings and Due Process Clauses? 77 N.C. L. REV. 1525 (1999); John Echeverria & Sharon Dennis, The Takings Issue and the Due Process Clause: A Way Out of a Doctrinal Confusion, 17 VT. L. REV. 695 (1993); Frank Michelman, Takings, 1987, 88 COLUM. L. REV. 1600 (1988).

7. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 32 ELR at 20627.

8. Id. at 5.

9. People of State of Cal. ex rel. Van De Kamp v. TRPA, No. Civ. S-84-0561 EJG, 1984 WL 6591 (E.D. Cal. June 15, 1984).

10. California v. Tahoe Reg'l Planning Agency, 766 F.2d 1308, 16 ELR 20909 (9th Cir. 1985).

11. The lower courts whittled down the takings challenge by rejecting an as-applied challenge under Penn Central and by denying that the injunction period gave rise to a duty to compensate. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg'l Planning Agency, 34 F. Supp. 1226, 29 ELR 21290 (D. Nev. 1999); Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg'l Planning Agency, 216 F.3d 764, 30 ELR 20638 (9th Cir. 2000).

12. Although the landowners sought recovery for both periods, they lost their challenge on the injunction period and were left with two options: challenge the entire six years under Penn Central, which required significant fact-finding and on which they had lost at the trial court level, or simply appeal the moratoria period under a per se takings test. The risk, of course, was that by not appealing the decision that the injunction period did not work a taking, and by not pursuing Penn Central balancing, the landowners were left with a relatively short period of development restrictions that alone probably had very little impact on the land's value.

13. Tahoe-Sierra, 34 F. Supp. 2d at 1226, 29 ELR at 21290.

14. 32 ELR at 20630 (citing United States v. Pewee Coal Co., 341 U.S. 114 (1951) (in which the federal government took over coal leases); United States v. General Motors Corp., 323 U.S. 373 (1945); United States v. Petty Motor Co., 327 U.S. 372 (1946)). The Courts often refer to Kaiser Aetna v. United States, 444 U.S. 164, 10 ELR 20042 (1979), to support this proposition, though it seems clearly to have been decided under Penn Central balancing by finding that the landowner's reasonable investment-backed expectations called for compensation when a private marina was forced to become public by the application of the federal navigational servitude.

15. United States v. Causby, 328 U.S. 256 (1946) (finding a taking of airspace when planes approach a government airport).

16. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) (finding a taking when a legislature requires that landlords allow cable television hookups on leased premises); Pruneyard Shopping Ctr. v. Robbins, 447 U.S. 94 (1980) (finding no taking when private mall owners are required to allow war protestors because their presence is temporary and the mall owner opened his land to the general public); Yee v. City of Escondido, 503 U.S. 519 (1992) (finding no taking by combination of mobile home residency and rent control ordinances because mobile home park owners invitedthe occupation in the first place).

17. See Agins v. City of Tiburon, 447 U.S. 255, 10 ELR 20361 (1980); Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 8 ELR 20528 (1978); San Diego Gas & Elec. Co. v. San Diego, 450 U.S. 621, 11 ELR 20345 (1981); Nollan v. California Coastal Comm'n, 483 U.S. 825, 17 ELR 20918 (1987); First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 17 ELR 20787 (1987); Andrus v. Allard, 444 U.S. 51, 9 ELR 20791 (1979) (prohibiting the sale but not the use and ownership of eagle feathers). See also Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 17 ELR 20440 (1987) (prohibition on mining coal in ways that undermine subjacent support of surface estate owners) and Block v. Hirsh, 256 U.S. 135 (1921) (rent control ordinance prohibiting excess increases in rent).

18. 32 ELR at 20630.

19. 444 U.S. 164, 10 ELR 20042 (1979).

20. The Court's discussion in Kaiser Aetna focuses on the investment-backed expectations of the parties as well as the importance of the right to exclude. Thus, we can say that two of the three Penn Central prongs were satisfied.

21. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982); Hodel v. Irving, 481 U.S. 704 (1987).

22. 458 U.S. 419 (1982).

23. Id. at 434-35 (citation omitted).

24. 503 U.S. 519 (1992).

25. 505 U.S. at 1028-29, 22 ELR at 21111.

26. 483 U.S. 825, 17 ELR 20918 (1987).

27. 512 U.S. 374, 24 ELR 21083 (1994).

28. 447 U.S. 225, 10 ELR 20361 (1979).

29. Id. at 260, 10 ELR at 20362.

30. 277 U.S. 183 (1928) (due process challenge to an as-applied zoning ordinance).

31. 505 U.S. at 1017, 22 ELR at 21108.

32. 444 U.S. 51, 9 ELR 20791 (1979).

33. Such a possibility was not lost to the Court, but such mistakes in argument are not isolated or occasional. The petitioners should have known that no temporary restriction could cause 100% economic loss because, by its very temporariness, there exists the possibility that its eventual removal will cause the land to reacquire value.

34. Ironically, law review authors and legal commentators continue to speak of a distinction between facial and as-applied challenges, though most note that the Court has failed to maintain the distinction. See, e.g., Andrea Peterson, The Taking Clause: In Search of Underlying Principles Part I—A Critique of Current Takings Clause Doctrine, 77 CAL. L. REV. 1299 (1989).

35. 447 U.S. at 260, 10 ELR at 20362.

36. Nollan v. California Coastal Comm'n, 483 U.S. 825, 17 ELR 20918 (1987); Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 22 ELR 21104 (1992); Dolan v. City of Tigard, 512 U.S. 374, 24 ELR 21083 (1994).

37. The Court used Penn Central balancing for the facial challenge in Keystone Bituminous Coal Co v. DeBenedictis, 480 U.S. 470, 17 ELR 20440 (1987).

38. 32 ELR at 20633.

39. Id. at 20634.

40. 152 U.S. 133 (1894) (articulating a test in substantive economic due process cases that requires the state to show that: "The interests of the public generally, as distinguished from those of a particular class, require such interference; and, second, that the means are reasonably necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals.").

41. 291 U.S. 502 (1934).

42. Although we are familiar with the dichotomy between fundamental rights and nonfundamental rights in the substantive due process liberty cases, property rights have been considered nonfundamental since Nebbia in the economic due process cases. And though the Court has not raised property rights to fundamental-rights status, it has created what appears to be an intermediate level of protections for those property rights historically associated with landownership. And while there is great doubt as to the historic pedigree of, and actual substance of those core property rights, the Court's action nevertheless remains an elevation of scrutiny above the level usually associated with nonfundamental rights under either the economic or liberty prongs of substantive due process. For a good explanation, see EDWARD KEYNES, LIBERTY, PROPERTY, AND PRIVACY: TOWARD A JURISPRUDENCE OF SUBSTANTIVE DUE PROCESS (1996); see also Santa Monica Beach Ltd. v. Superior Court, 968 P.2d 993 (Cal. 1999).

43. Lucas, 505 U.S. at 1028, 22 ELR at 21110 ("In the case of land, however, we think the notion pressed by the Council that title is somehow held subject to the 'implied limitation' that the State may subsequently eliminate all economically viable use is inconsistent with the historical compact recorded in the Takings Clause that has become part of our constitutional culture.").

44. 198 U.S. 52 (1904).

45. Id.

46. 482 U.S. at 306, 17 ELR at 20787.

47. Ironically, the district court felt certain that the Supreme Court, on appeal, would find no distinction between prospective and retrospective temporary restrictions. Tahoe-Sierra, 34 F. Supp. 2d at 1250, 29 ELR at 21300. We are sure Judge Edward C. Reed is as surprised as most commentators by the Court's decision.

48. Agins v. Tiburon, 598 P.2d 25 (Cal. 1987).

49. First English, 482 U.S. at 319, 17 ELR at 20791.

50. First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 210 Cal. App. 3d 1353, 19 ELR 21329 (Cal. Ct. App. 1989).

51. United States v. Petty Motors, 327 U.S. 372 (1946); Kimball Laundry Co. v. United States, 338 U.S. 1 (1949); United States v. General Motors Corp., 323 U.S. 373 (1945).

52. The district and circuit courts in Tahoe-Sierra disagreed on how to read First English. The district court held that there was no distinction between prospectively temporary moratoria and retrospectively amended or foreshortened legislation, thus finding a taking. 34 F. Supp. 2d at 1250, 29 ELR at 21300. The circuit court, however, followed the dissent in First English to distinguish between intentionally temporary planning moratoria and foreshortened restrictions that are amended because they would otherwise work a taking. 216 F.3d at 774, 30 ELR at 20643.

53. As the dissent notes, quite correctly, "the Court has reached out to address an issue not actually presented in this case, and has then answered that self-imposed question in a superficial and, I believe, dangerous way." First English, 482 U.S. at 322, 17 ELR at 20792 (Stevens, J., dissenting).

54. The problem with such a rule should be obvious; an important regulation that is well worth the cost of compensating landowners for their unique burdens would have to be stricken because compensation would otherwise be due.

55. First English, 482 U.S. at 327, 17 ELR at 20793 (Stevens, J., dissenting).

56. Lucas, 505 U.S. at 1026, 22 ELR at 21110.

57. Plymouth Coal Co. v. Pennsylvania, 232 U.S. 531 (1914); Hadacheck v. Sebastian, 239 U.S. 394 (1915); Goldblatt v. Hempstead, 369 U.S. 590 (1962).

58. 276 U.S. 272 (1928).

59. 123 U.S. 623 (1887) (although the land retained some value, the beer-making equipment did not).

60. 444 U.S. 51, 9 ELR 20791 (1979).

61. 505 U.S. at 1025, 22 ELR at 21110 (citing Joseph Sax, Takings and the Police Power, 74 YALE L.J. 36, 49 (1964)). The district court, however, cited the equally famous book by Prof. Ernst Freund, (ERNEST FREUND, THE POLICE POWER (Arno Press 1976) (1904)), in which he distinguished between eminent domain and the police power, the former being permitted because it confers a benefit, the latter because it prevents harm. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg'l Planning Agency, 638 F. Supp. 126, 135, 17 ELR 20584, 20588 (1986).

62. 450 U.S. 621, 11 ELR 20345 (1981).

63. Lucas, 505 U.S. at 1058, 22 ELR at 21116 (Blackmun, J., dissenting).

64. Id.

65. Nollan v. California Coastal Comm'n, 483 U.S. 825, 17 ELR 20918 (1987).

66. That rule is often also discussed in terms of the "denominator" in the takings calculus, i.e., if the right taken is identical to the entire right being considered, then a full taking would occur, but if the numerator is just a small stick in the entire bundle of rights, and the denominator is the entire bundle, the restriction is likely not to be deemed compensable.

67. Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 8 ELR 20528 (1978); Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 17 ELR 20440 (1987).

68. Florida Rock Indus. v. United States, 18 F.3d 1560, 24 ELR 21036 (Fed. Cir. 1994).

69. Andrus v. Allard, 444 U.S. 51, 9 ELR 20791 (1979); Hodel v. Irving, 481 U.S. 704 (1987).

70. Dolan v. City of Tigard, 512 U.S. 374, 24 ELR 21083 (1994).

71. United States v. General Motors Corp., 323 U.S. 373 (1945).

72. See United States v. Peewee Coal Co., 341 U.S. 114 (1951); United States v. General Motors Corp., 323 U.S. 373 (1945); United States v. Petty Motor Co., 327 U.S. 372 (1946). The Ninth Circuit in Tahoe-Sierra agreed that this is the distinction between the temporary takings precedents cited in First English that required compensation and the temporary moratoria today that do not require compensation. 216 F.3d at 779, 30 ELR at 20643.

73. Presbytery of S.E. Iowa v. Harris, 226 N.W.2d 232 (Iowa), cert. denied, 423 U.S. 830 (1975).

74. See Tahoe-Sierra, 32 ELR at 20632.

75. Id.

76. Tahoe-Sierra, 34 F. Supp. 2d at 1226, 29 ELR at 21290.

77. Tahoe-Sierra, 216 F.3d at 764, 30 ELR at 20638. The Supreme Court adopted this reasoning.

78. Lucas, 505 U.S. at 1043-45, 22 ELR at 21114-15.

79. 121 S. Ct. 2448, 32 ELR 20516 (2001).

80. 260 U.S. 393 (1922).